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Hall-Magner Group v. Convocation Flowers

July 27, 2012

HALL-MAGNER GROUP,
PLAINTIFF,
v.
CONVOCATION FLOWERS, INC., AND COMMENCEMENT FLOWERS, INC. DEFENDANTS.



The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge

ORDER: (1) GRANTING DEFENDANTS' MOTION TO DISMISS; AND (2) DENYING DEFENDANTS' MOTION FOR SANCTIONS (ECF Nos. 22, 24)

Presently before the Court is Defendants Convocation Flowers, Inc. and Commencement Flowers, Inc.'s motion to dismiss Plaintiff's First Amended Complaint ("FAC") for lack of personal jurisdiction (MTD, ECF No. 22), as well as Plaintiff's opposition (Opp'n to MTD, ECF No. 26) and Defendants' reply (Reply ISO MTD, ECF No. 27). Also before the Court is Defendants' motion for sanctions against Plaintiff and Plaintiff's counsel (Mot. for Sanctions, ECF No. 24), which Plaintiff has opposed (Opp'n to Sanctions, ECF No. 25), and Defendants have supported in reply (Reply ISO Sanctions, ECF No. 28). Having fully considered the parties' arguments and the law, the Court GRANTS Defendants' motion to dismiss for lack of personal jurisdiction, and DENIES Defendants' motion for sanctions.

BACKGROUND*fn1

Plaintiff Hall-Manger Group, which does business as "Commencement Flowers," provides flowers for university graduations throughout the United States, including in California. (FAC ¶ 1-2, ECF No. 16). On November 9, 2010, Plaintiff registered the mark "Commencement Flowers" on the Supplemental Registry of the U.S. Patent and Trademark Office, with a first use in commerce date in 1988. (Id. at ¶ 16).

Plaintiff brought this action on February 15, 2011, asserting six causes of action against Darryl Firsten-three for trademark infringement under the Lanham Act, and three related causes of action under California Law-and seeking an injunction as well as damages. (Compl., ECF No. 1.) The Court granted Defendants' motion to dismiss for lack of personal jurisdiction on October 24, 2011, giving Plaintiff leave to file an amended complaint that alleged facts to support the existence of personal jurisdiction. (Oct. 24, 2011 Order 10, ECF No. 15.)

On November 3, 2011, Plaintiff filed the operative FAC. Instead of against Darryl Firsten, the FAC asserts the same six claims against Defendants Convocation Flowers, Inc. ("Convocation Flowers"), a Canadian corporation, and Commencement Flowers, Inc., ("Commencement Flowers"), a New Jersey corporation. (FAC ¶ 6.) Plaintiff alleges Darryl Firsten owns both corporations, and that Convocation Flowers is the alter ego of Commencement Flowers. (Id. at ¶ 22.) Defendants operate two identical websites, convocationflowers.ca and commencementflowers.com, which sell flowers for graduations. (Id.) Using these websites, individuals-such as the parents of students who attend specific participating universities in the Midwestern or Eastern United States, or Canada-are able to log onto one of Defendants' websites through a special link at the school's event page to purchase flowers for pickup at that university's commencement. (See Opp'n to MTD, Ex. 12 at 1-2; Reply 5.) Although anyone may access Defendants' websites directly, the sites do not allow a general user who has not accessed them through an affiliated school's link to enter credit card information or finalize a purchase; instead, a page indicates that Defendants "do not sell flowers to the general public at this time." (Opp'n to MTD 1.) On these websites, as well as in printed advertising, e-mail communications, marketing literature passed out at commencements, and in direct communication with schools and universities that comprise Plaintiff's market, Defendants use Plaintiff's registered mark, "Commencement Flowers," thereby infringing upon Plaintiff's mark. (FAC ¶ 3-4.)

Plaintiff discovered Defendants' alleged infringement "[o]n or before November 22, 2010, as a result of a search on the internet" which revealed that Defendants "were operating a retail website service business in which they sold Flower Products throughout the United States under the mark 'Commencement Flowers' and under the trade name 'Commencement Flowers.'" (FAC ¶ 25.) Specifically, Plaintiff alleges Defendants use the above-referenced websites to solicit business to sell flowers in California. (Id. at ¶ 26.) On November 24, 2010, Plaintiff requested Defendants cease and desist using the infringing trade name and mark, but Defendants have refused to comply. (Id. at ¶ 27.)

Although not alleged in the FAC, in opposing Defendants' instant motion Plaintiff asserts, through the Declaration of Robert Hall, that on May 15, 2008, an incident occurred in Fullerton, California on the campus of the University of California, Irvine, where Concordia University was holding its graduation ceremony. (Hall Decl., Ex. 11 to Opp'n to MTD.) In this declaration, Mr. Hall attests that on or about May 15, 2008, he was "advised via telephone by [his] team supervisor of a problem at the campus of University of California in Irvine, California [UCI]. . . . [The] team supervisor, Matt Gilbert, observed that defendant Darryl Firsten's team was present on the campus. They also called themselves Commencement Flowers and they were trying to sell flowers at [Concordia University's] graduation." (Id.) Mr. Hall further states he instructed Matt Gilbert to contact the campus police, which stopped Defendants' team while they were "in the process of setting up a kiosk on the campus," and "escorted the defendant's crew off the campus because their products and services were in breach of an existing contract between Hall-Manger Group and UCI for the exclusive right to provide graduation flowers." (Id.) Defendants deny these allegations entirely, explaining that they do "service" a Concordia University, but that it is located in Quebec, Canada, not California. (Reply ISO MTD 10.) Defendants instead assert, through the Declaration of Darryl Firsten, that neither Defendant has ever "sold flowers in connection with events at any schools in California." (MTD 5; Firsten Decl. ¶ 14, Ex. A to MTD.)

1. Motion to Dismiss under Rule 12(b)(2)

A. Legal Standard

Federal Rule of Civil Procedure 12(b)(2) allows district courts to dismiss an action for lack of personal jurisdiction. "Where defendants move to dismiss a complaint for lack of personal jurisdiction, plaintiffs bear the burden of demonstrating that jurisdiction is appropriate." Dole Food Co. Inc. v. Watts, 303 F.3d 1104, 1108 (9th Cir. 2002). "The court may consider evidence presented in affidavits to assist in its determination and may order discovery on the jurisdictional issues." Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001) (citing Data Disc, Inc. v. Sys. Tech. Ass'n, Inc., 557 F.2d 1280, 1285 (9th Cir. 1977)). "When a district court acts on the defendant's motion to dismiss without holding an evidentiary hearing, the plaintiff need make only a prima facie showing of jurisdictional facts to withstand a motion to dismiss." Id. (citing Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995)).

In establishing personal jurisdiction, a plaintiff's uncontroverted allegations are taken as true. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). However, this same assumption does not apply to allegations that are contradicted by affidavit. Data Disc, 557 F.2d at 1284. If the parties submit conflicting affidavits, the plaintiff's version trumps. Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011) ("We may not assume the truth of allegations in a pleading which are contradicted by affidavit, but we resolve factual disputes in the plaintiff's favor.") (internal quotation marks and citations omitted); Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1129 (9th Cir. 2003) ("Unless directly contravened, [the plaintiff's] version of the facts is taken as true, and 'conflicts between the facts contained in the parties' affidavits must be resolved in [the plaintiff's] favor for purposes of deciding whether a prima facie case for personal jurisdiction exists.'") (citing Unocal Corp., 248 F.3d at 922).

Where no federal statute authorizes personal jurisdiction, district courts apply the law of the state in which they sit. Fed. R. Civ. P. 4(k)(1)(A); Mavrix, 647 F.3d at 1223. California's long-arm statute permits the exercise of personal jurisdiction so long as it comports with federal due process. See Cal. Civ. Proc. Code § 410.10; Fred Martin Motor, 374 F.3d at 800--01. Accordingly, the Court's jurisdictional analysis under California law is coextensive with a federal due process analysis. "For a court to exercise personal jurisdiction over a nonresident defendant, that defendant must have at least 'minimum contacts' with the relevant forum such that the exercise of jurisdiction 'does not offend traditional notions of fair play and substantial justice.'" Fred Martin Motor, 374 F.3d at 801 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotation marks omitted)).

Under the minimum contacts test, jurisdiction can be either "specific" or "general." Doe, 248 F.3d at 923. "Specific jurisdiction exists 'where the cause of action arises out of or has substantial connection to the defendant's contact with the forum.'" ChemRisk v. Chappel, 2011 WL 1807436, at *3 (N.D. Cal. May 12, 2011) (quoting Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1123 (9th Cir. 2002)). "[G]eneral jurisdiction depends on the defendant's 'substantial, continuous ...


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